THE boss of Loganair has revealed the airline has returned to profit in its most financial recent year, but admits Brexit uncertainty has led to this year’s summer bookings being softer than forecast.
Jonathan Hinkles, managing director of the Glasgow-based airline, said accounts for the year to the end of March will underline its recovery from its acrimonious split with Flybe in 2017, which contributed to the company making a pre-tax loss of nearly £9 million last time.
Loganair had served the Scottish Highlands and Islands under a long-standing franchise agreement with Flybe, but returned to running those routes under its own banner after the deal came to an end.
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Speaking as Loganair prepares to launch the first Glasgow to London route in its 57-year history, Mr Hinkles said the Flybe split was now “very much” in the past.
And he said the company has made its return to the black in spite of challenging conditions across the European aviation sector, sparked by Brexit, high fuel prices and weak consumer confidence which have contributed to a series of airline failures. These include former Loganair sister firm Flybmi, which collapsed in February.
Mr Hinkles, who was unable to disclose the profit figure as the accounts have still be signed off, said: “Most importantly of all, we did what we said we would, and we got to the year end at the 31st of March with a return to profitability, which I think makes us unique among UK regional airlines.
“Clearly, bmi ceased trading, [and] both Flybe and Eastern Airways are indicating that they are loss-making, through reports that are available in the public domain. So I think for us to have weathered a very, very difficult winter, but still made a profit over the course of the last financial year, is a credit to the hard work of everyone involved in the Loganair team.”
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He added: “We certainly haven’t seen the last of the changes within the industry, and we certainly haven’t seen the last of the shake-out. It is a very, very challenging environment, with relatively low levels of consumer confidence [and] high fuel costs, which have spiked back up again this week after Donald Trump [began] making noises again about Iran.”
Mr Hinkles also conceded that Loganair is not immune from the pressures of Brexit. Shares in travel company Thomas Cook have been hammered in recent days since warning UK travellers were putting bookings on hold amid the continuing Brexit uncertainty.
Mr Hinkles said: “We are in line with where we were last year, and I would have expected to be slightly ahead.”
He noted that Loganair bookings are currently running within one or two per cent ahead of where they were last year on “mature routes”, having previously forecast a 3% to 5% increase.
However, he pointed out that growth may yet come back in the summer because people are generally leaving it later to make commitments.
Meanwhile, asked for his view on the recent decision by Scottish ministers to scrap a commitment to reduce APD, Mr Hinkles said he was disappointed the ferry service has not been part of the debate around tax and climate change. He believes APD should be reformed in way which reflects his view that it is more environmentally-friendly to serve the Highlands and Islands by air, rather than road.
Mr Hinkles noted that Loganair will be lobbying the UK Government to end the current practice of consumers being taxed twice on round-trip flights within the UK in its submission to the Department for Transport’s Aviation 2050 strategy document. He said APD should be charged per ticket, not per flight.
Loganair will launch its Glasgow to Southend service on Tuesday (May 28), following the recent introduction of a route from Aberdeen to the Essex airport. Mr Hinkles has been pleased with feedback received for the Aberdeen service, with consumers highlighting the ease through which they can pass through Southend and on to the train. He said Liverpool Street can be reached from Southend in 57 minutes by rail, a few minutes longer than from Stansted but more quickly in terms of getting through the terminal and on to the train.
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